📢 November Signals

🗒️ Market update

‘Never sell your Bitcoin,’ Donald J. Trump told us in July this year. Cassandra-esque, or just a populist vote grab? Is it onwards to $120k BTC and higher, or is the Trump trade losing steam? BTC came within $200 of the psychological $100k barrier over the weekend, while the MTC Digital Asset fund, after a demand driven mid month NAV, recorded +36.6% November month-to-date and 112.2% year-to-date figures.

The market has been ‘up only’ since Trump’s decisive victory, BTC up 49% in just 18 days to US$99,800 and the total crypto market cap reaching US$3.35Trn. BTC is taking a breather after that rapid move up as the psychological 100k mark sees some profit taking and a chance for market makers to sweep up some leveraged longs that are out over their skis. Over $400m liquidated over the last 24 hours. We see the next move as back up to retest the $100k ‘sell wall’ and ultimately push through this barrier before year end.

Bitcoin and Crypto are central to Trump’s policy agenda, all major cabinet positions have gone to crypto advocates, Scott Bessent as Treasury Secretary and Howard Lutnick as Commerce Secretary are chief among them, while the 4 clear front runners for new SEC Chair are Uyeda (an existing commissioner on record criticising the current anti-crypto approach and has outlined his plans to make the U.S. the leader in the sector), Atkins (co-chaired crypto advocacy group Token Alliance), Brooks (former Binance US CEO) or Goody-Guillen (crypto lawyer) each represent a seismic shift from Gensler’s ultra hawkish tenure at the agency.

Traditional markets media and commentators are for the most part fading these clear markers. As best as I can tell, they hope for a ‘capricious’ Trump reversal on the topic. Our view remains clear: Bitcoin and Crypto are fundamental to Trump’s MAGA agenda and just like we had a great opportunity to front run a Trump win we have another great opportunity to front the 20 January inauguration where this agenda will be implemented from day 1. Standard Chartered, who have a great track record in this area, predict $200k BTC by year end 2025. We broadly agree that this is a good mental map for where the market is headed, potentially much higher as MSTR, BlackRock, the U.S. Government and several U.S. states all compete to increase their bitcoin holdings. The U.S. Government can print money to do this while bond market participants, like Allianz, will offer billions to MSTR for 0% convertible finance and 2.5x oversubscribed offer this week saw MSTR purchase a further 55,000 BTC, suggesting there is scope to accelerate their purchases. 

BTC dominance is potentially breaking down, signalling Alt season could be upon us.  BTC.D hit a cycle high of 61.5% last week but has since made a lower low (LL in chart below) to 58.5%, this aligns with our broader cycle view that Alt season is imminent, and due to start not long after the US election, where markets have more certainty and global liquidity picks up.

Alts have been a mixed bag, and with ETH’s weakness having a big impact on BTC.D it could be more challenging to discern if alt season has started. Old tokens overrepresented below in ‘Gen 1 Smart Contracts’ (e.g. ADA, HBAR) and ‘Store of Value’ (e.g. XRP, BCH) have roared back to life with huge gains this month indicating retail investors are back (the Coinbase app also re-entered the top 5 in app store downloads).  These old tokens are still a long way off their previous cycle highs, have not done any significant development in the intervening period, and as such we are wary of that price action, expecting they will hand back much of these gains, particularly vs BTC.

Meme coins started gaining traction over the last month, whatever you might think of them the virality and engagement associated with the sector is hard to ignore. They are also a good indicator for risk, and while they are easy to critique as have no lasting value they are a great onboarding tool as they capture the imagination of new crypto investors.  They are chasing big returns, but so are lottery ticket buyers, the odds in meme coins look a lot better and don’t require hours and hours of research to understand the tokenomics, use case, adoption rates and total addressable market of a protocol. Coin with picture of a dog wearing a hat and number go up = happy. 

 Key dates to watch

• 3/6 December – U.S. Jobs data JOLTs/Non Farm payrolls
• 11 December – U.S. CPI
• 19 December – FOMC (55% chance of another 25bp cut)
• 20 January – DAY 1 for the Trump Administration 

💡The Merkle Tree Capital “Why?”

We know accessing the digital asset sector is challenging, presenting a new set of risks that most investors are not familiar with, and there is a lot of sub-standard information flying around. That is why we created an actively managed unit trust aiming to hold the best digital assets that will form the basis of the ecosystem over the next 5-10 years.

Investors can now access this new asset class without concerns around self-custody or dealing with unknown counterparties, simplify their tax reporting, avoid single asset risk, maximise yield, and access institutional risk management and portfolio construction.   

🧠 SMART – actively managed, enhance risk adjusted returns, sophisticated portfolio construction, staking yield, simple exposure – no passwords or digital wallets

🔒 SECURE – institutional custody, staking in cold storage, insurance, counterparty due diligence 

🪙 CRYPTO – Blockchain eliminates intermediaries, lowers costs and improves efficiency by bringing transparency and security.